One of the government’s reforms gets underway – merging national promotional bodies into one
The Lithuanian Government has decided to form a group of national promotional institutions on the basis of INVEGA. The authorised capital will be increased from EUR 8 million to EUR 53.4 million, the value of the companies to be merged. This will help to invest more quickly, more accurately and in a larger volume not only in Lithuanian businesses, but also in other sectors of the economy such as energy, agriculture and infrastructure projects.
On 19 October 2022, the government adopted a decision to increase the authorised capital of Investment and Business Guarantees UAB (lith. UAB “Investicijų ir verslo garantijos” -INVEGA) from EUR 8 million to EUR 53.4 million. This decision was adopted to merge the national development institutions Public Investment Development Agency (lith. UAB “Viešųjų investicijų plėtros agentūra“ - VIPA), State Investment Management Agency (lith. UAB “Valstybės investicijų valdymo agentūra“ - VIVA) and Agricultural Loan Guarantee Fund (lith. UAB “Žemės ūkio paskolų garantijų fondas“ - ŽŪPGF) into INVEGA. The size of the share capital of the new company structure was determined by the market value of all the merging institutions.
Finance Minister Gintarė Skaistė explains: ‘We have gone a step further and done what previous governments have failed to do by consolidating the four national promotional institutions. By pooling their resources, knowledge and competences, a new structure will be formed that will attract more private capital and ensure greater investment in strategic areas for the country. One strong company will not only be more client-friendly, but will also ensure a high standard of public investment and raise Lithuania’s profile on the international stage.’
The increased share capital will help to strengthen the company’s credibility and attract funds from private investors and international financial institutions. This will complete one of the most important consolidation steps.
‘The increased share capital will help to strengthen the company’s credibility and attract funds from private investors and international financial institutions. This will complete one of the most important stages of the consolidation’, added Kęstutis Motiejūnas, CEO of INVEGA.
One derivative pays off
The consolidated company has a wide range of tasks ahead of it – targeting investments in areas of national importance, improving the business environment, promoting sustainable financing and capital markets through innovative financial instruments. It is also considering setting up a green finance institute, developing development cooperation activities, contributing to industrial transformation, modernisation of public sector facilities and infrastructure, digitalisation, energy independence and the development of renewable energy sources.
‘Until now, the national development institutions have had different operational strategies, mandates, funding sources and governance structures. Bringing them all together in one place – a single company – will not only allow us to make better use of the strengths and competences of all of them, but also to offer a consistent range of financial instruments to clients on a one-stop shop basis’, commented Minister of Finance G. Skaistė on the changes.
Bringing them all together in one place – one company – will not only allow us to make better use of the strengths and competences of all of them, but also to offer a consistent range of financial instruments to clients on a one-stop shop basis.
According to her, the practice of other EU countries shows that one strong state financial assistance entity is better than several different ones, and that businesses and other sectors are much more comfortable working with one development body.
The merger is planned to be completed next year
Corporate consolidation will eliminate duplication of functions and allow all resources to be used more efficiently. There will be a one-stop shop for dealing with ministries, investors, customers and other stakeholders.
By the end of this year, the Agricultural Loan Guarantee Fund (lith. ŽŪPGF) is expected to be merged into INVEGA and some of VIVA’s functions will be transferred. The majority of VIPA’s activities are also expected to be merged by the end of March 2023.
The new Supervisory Board will also ensure a high level of governance. Candidates for this position will be selected through an international competition.
One address in the future
There are no plans to change the seat of the institution at this time. Motiejūnas: ‘In the future, the consolidated entity should operate from a single office address. This will facilitate the reduction of the administrative burden and the efficiency of the group’s operations’.
The Ministry of Finance will exercise the shareholder rights of the National Promotional Authority. INVEGA was previously accountable to the Ministry of Economy and Innovation, but in May this year it became accountable to the Ministry of Finance. VIPA, VIVA and Agricultural Loan Guarantee Fund (lith. ŽŪPGF) are also accountable to the Ministry of Finance until the transfer of shares to INVEGA.
This is not the first such consolidation between important public bodies. In the summer of this year the Innovation Agency was launched, which was created by merging the Science, Innovation and Technology Agency (lith “Mokslo Inovaciju Ir Technologiju Agentura” – MITA), the Lithuanian Business Support Agency (lith. “Lietuvos verslo paramos agentūra“ - LVPA) and Versli Lietuva. The new agency is responsible for developing the innovation ecosystem and promoting exports.
